The capital markets regulator has proposed sweeping changes to the way mutual funds charge fees to investors for managing their money. The Securities and Exchange Board of India said in a discussion paper that mutual funds must make the total expense ratio - the annual fee that these asset managers collect from unitholders - uniform for scheme categories such as equity or debt.

• Sebi has proposed that the total expense ratio slabs should be at the level of the AMC and not at the scheme level. This means all equity schemes belonging to a fund house can charge a TER on the basis of the money managed. The same holds for non-equity assets like debt. Currently, every scheme is allowed to charge a separate TER based on the asset size.
• The regulator has proposed to allow mutual funds to charge a maximum TER of 2.55% for equity assets under management of less than Rs. 2,500 crore.